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KPMG Releases Action-by-Action Observations for BEPS

KPMG International releases action-by-action observations to help organizations understand the potential impacts of the final recommendations for the 15-point Base Erosion and Profit Shifting (BEPS) Action Plan released by the Organisation for Economic Co-operation and Development (OECD).

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On 5 October, the OECD released its final action plan recommendations for BEPS. While implementation and timing will vary across borders—and some European jurisdictions have already incorporated aspects of the plan—this final OECD release marks a crucial shift from the recommendation and consultation phase of BEPS to legislation and implementation.

Many governments around the world will now turn their attention to incorporating the OECD recommendations into local tax laws, while others will take a wait and see approach, observing the ways in which other jurisdictions translate the changes into their domestic policies. Regardless of where they are headquartered, multinational organizations will feel the impact of the changes ahead, which will include stronger calls for transparency, more stringent transfer pricing policies and greater reporting obligations.

“It is clear the tax landscape around the world is changing dramatically, and there are steps that organizations can take now to understand and assess the changes likely to affect their operations,” said Greg Wiebe, KPMG International’s Global Head of Tax. “These changes are not only about meeting new reporting requirements, but also about protecting financial competitiveness and reputation in the market. We encourage tax and business leaders to take stock of their current practices in order to understand and respond to the changing landscape.”

To help multinationals assess the potential impacts, tax professionals from KPMG member firms have analyzed the latest OECD recommendations and issued action-by-action observations, which include:

Notes on changes between the earlier OECD drafts and the final release on 5 October 2015

Assessments of the action plan items most likely to have a direct impact on country legislation

Identification of areas likely to be the most challenging for multinational organizations to address

Early-stage predictions for country implementation.

“Near term, there is a significant risk of greater uncertainty and potential for increased controversy,” said Manal Corwin, Head of KPMG International’s Global BEPS Network and national leader of International Tax at KPMG in the US. “In this regard, meaningful progress on Action Item 14, which focuses on improving access to and effectiveness of dispute resolution, will be essential. In particular, securing broad-based support for mandatory binding arbitration to resolve disputes would be a monumental and important achievement of the overall initiative.”

More information on the OECD Action Plan on Base Erosion and Profit Shifting can be found in our TaxNewsFlash - BEPS Special Edition and on the OECD website.

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 155 countries and have 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.